Rent or Buy
Use this calculator to see the financial difference between renting or buying a home.
Renting Costs
Buying Costs
Purchase Costs
| Purchase price |
800,000
|
| Down payment percent |
7.50%
Down Payment
The minimum down payment for homes with a purchase price of $0 to $500,000 is 5%. For amounts over $500,000 an additional 10% down payment is required for each dollar over $500,000. For amounts over $1,000,000 a 20% down payment is required. |
| Down payment |
60,000
|
| Mortgage interest rate |
5.50%
Interest Rate
Enter the rate you will be paying on your mortgage. |
| Amortization (years) |
25
Amortization
Enter a value between 1 and 25 years.
Input Error
Must be less than or equal to 25 years. |
| Closing costs percent |
1.00%
Closing Costs
These are one-time fees buyers must pay when purchasing a home. These costs include, but are not limited to: land or property transfer taxes, lawyer fees and inspection fees (home inspection, property appraisal, title insurance) and prepaid property taxes, utility bills and other charges. |
| Closing costs |
8,000
|
Home Ownership Costs
|
Monthly
|
Annually
|
| Property taxes |
500
|
6,000
|
| Home maintenance |
600
|
7,200
|
| Home insurance |
100
|
1,200
|
| Utilities (monthly) |
500
|
6,000
|
| Condo fees (monthly) |
0
|
0
|
| Totals |
1,700
|
20,400
|
| Inflation rate |
2.00%
Inflation Rate
The inflation rate is used to calculate annual increases in property taxes, home maintenance, insurance and utilities. |
Home Appreciation
| How long do you plan to stay? |
15
How Long?
Enter the number of years you play on living in this home before selling it.
Input Error
Must be less than or equal to years. |
| Home appreciates at what rate per year? |
4.00%
Home Appreciation Rate
Enter the estimated annual increase in the value of your home. |
| Annual investment rate of return |
5.00%
Rate of Return
The difference between renting and buying is invested at this annual rate of return. |
| Selling costs as a percent of future home value |
5.00%
Selling Costs
These include real estate commissions, legal fees, staging fees, moving expenses, repairs and renovations. |
Results
Financial Gain in Years
Rent
Buy
| Future Benefit of Renting in Years | ||||
| Rent | Buy | |||
| Monthly rent and mortgage payment | A | $2,000 | $4,698 | |
| Other monthly payments | B | $100 | $1,700 |
Other Monthly Payments
Other monthly payments under Rent are insurance. Other monthly payments under Buy are property taxes, home maintenance, insurance, utilities and condo fees. |
| Total monthly payment | A + B | $2,100 | $6,398 | |
| Total annual payment in year 1 | $25,200 | $76,711 |
Total Annual Payment in Year 1
Payments will increase each year because of rent increases and increases in property taxes, maintenance, utilities, insurance and condo fees due to inflation. |
|
| Total payments over years | $435,794 | $1,198,349 |
Total Payments
Payments will increase each year because of rent increases and increases in property taxes, maintenance, utilities, insurance and condo fees due to inflation. |
|
| Investment value from renting | $1,302,016 | |||
Future Benefit of Buying in Years |
||||
| Estimated home value | A | $1,440,775 | ||
| Less mortgage balance | B | $434,079 | ||
| Less selling costs (% of home value) | C | $72,038 | ||
| Home gain | (A - B - C) | $934,638 | ||
Summary |
||||
| Investment value from renting | $1,302,016 | |||
| Home gain | $934,638 | |||
| $367,378 |
Table
Details
Assumptions
The financial gain from buying represents the projected value of your home when you sell minus any outstanding mortgage balance and selling costs. The financial gain from renting represents the growth of the down payment, closing costs and mortgage insurance since these amounts could be invested instead if you choose to rent. Investment growth is before taxes. If your rent payment (rent plus insurance) is less than the total buy payment (mortgage payment, property taxes, maintenance, utilities, insurance and condo fees), the annual savings from paying less in rent are added to the investment at the end of each year. If the rent payment is greater than the total buy payment, the difference is subtracted from the investment. The inflation rate is used to calculate annual increases in property taxes, home maintenance, insurance and utilities. If your down payment is less than 20%, the calculator includes the appropriate amount of mortgage insurance. If you enter a down payment less than the required minimum, the calculator adjusts this amount to the minimum.
Disclaimer
The financial gain from buying represents the projected value of your home when you sell minus any outstanding mortgage balance and selling costs. The financial gain from renting represents the growth of the down payment, closing costs and mortgage insurance since these amounts could be invested instead if you choose to rent. Investment growth is before taxes. If your rent payment (rent plus insurance) is less than the total buy payment (mortgage payment, property taxes, maintenance, utilities, insurance and condo fees), the annual savings from paying less in rent are added to the investment at the end of each year. If the rent payment is greater than the total buy payment, the difference is subtracted from the investment. The inflation rate is used to calculate annual increases in property taxes, home maintenance, insurance and utilities. If your down payment is less than 20%, the calculator includes the appropriate amount of mortgage insurance. If you enter a down payment less than the required minimum, the calculator adjusts this amount to the minimum.
Disclaimer
